The key to identifying overseas suppliers is comprehensive research. You should examine and carefully analyse the potential countries to trade with, as well as individual suppliers within those countries.
Factors that should influence your decision include:
- Familiarity with the country: Knowing your target country and having contacts within your sector there makes doing business easier.
- Communication: If you (or your employees) don’t speak the local language, check that english is widely spoken by businesses, or that translators and interpreters are available.
- Membership of the european union (eu): In EU countries, many key regulations and standards will be similar to or the same as in the UK.
- Development level: It’s generally easier to trade with developed countries than developing ones.
- Distance: This affects shipping costs, the length of your trading cycle, and the ease of visiting suppliers, if necessary.
- Levels of existing trade with the UK, USA and other Countries: High volumes suggest other businesses have successfully chosen the route you’re considering.
Vendor evaluation is largely founded on data. Therefore, this should be a carefully structured process, centered on quantifiable performance indicators such as delivery times, production costs, and inventory levels. A standardized set of supplier evaluation criteria provides a necessary frame of reference with which you can assess a supplier’s abilities and compare it with those of competitors.
Before evaluating a current or potential supplier, however, a company must set clear expectations for the relationship between them. At the outset, you should clearly articulate your goals so that the supplier fully understands the obligations involved and can adjust operations accordingly if needed.
Benefits to be gleaned when you work with foreign suppliers.
- Access to resources. Sometimes, foreign countries have access to certain raw materials that don’t exist in the United States. Other times, the quality is better in foreign countries. Either way, there are advantages to sourcing materials from their native countries.
- Cost advantage. Obviously the biggest benefit is the cost advantage. In many instances, foreign countries have a comparative advantage when it comes to the cost of goods and raw materials. As a result, the same product can be produced for a much lower cost and then imported to the United States.
- Trade agreements. Finally, the United States has trade agreements with many different countries that can make importing a breeze. Sometimes the agreement allows businesses to bypass certain landed costs and make the transaction even more cost effective.
While supplier evaluation can be based on a number of factors, there are several considerations that every company should address, regardless of the specific industry. Some of these elements include:
While it can be difficult to quantify the quality of a product, this should always be a central component of a supplier evaluation. ISO BS/EN ISO 9001:2000 certification remains the industry standard here, which indicates that the supplier excels in management responsibility, resource management, product realization, and measurement, analysis, and improvement.
All supplier evaluations should thoroughly appraise the supplier’s abilities and limitations. A supplier that cannot scale production in response to your production cycles will not fare well in any review.
Your company should ask as many questions as needed to determine whether a supplier can handle your typical functions. Previous experiences with similar companies, relevant recent projects, and possible advances on current products or processes are all valid subjects for discussion.
Sustainability is an essential element of a successful business for both financial and ethical reasons. An evaluation should cover a supplier’s waste management strategies, waste reduction practices, and material procurement procedures, as well as efforts to achieve energy efficiency and any protocols employed when handling harmful materials.
Every business invariably confronts some risks, but its suppliers should actively work to minimize them throughout the supply chain. Reviewing performance metrics such as overall delays, average response time, and corrective actions can help you develop a reliable quantitative assessment of the risks posed by a particular supplier.